CRS Report for Congress
Prepared for Members and Committees of Congress
Harbor Maintenance Trust Fund Expenditures
John Frittelli
Specialist in Transportation Policy
January 25, 2010
Congressional Research Service
7- 5700
www. crs. gov
R41042
Harbor Maintenance Trust Fund Expenditures
Congressional Research Service
Summary
In 1986, Congress enacted the Harbor Maintenance Tax ( HMT) to recover operation and
maintenance ( O& M) costs at U. S. coastal and Great Lakes harbors from maritime shippers. O& M
is mostly the dredging of harbor channels to their authorized depths and widths. The tax is levied
on importers and domestic shippers using coastal or Great Lakes ports. Due to a Supreme Court
decision in 1998, exporters no longer pay the tax because it was found unconstitutional. The tax is
assessed at a rate of 0.125% of cargo value ($ 1.25 per $ 1,000 in cargo value). The tax revenues
are deposited into the Harbor Maintenance Trust Fund ( HMTF) from which Congress
appropriates funds for harbor dredging.
Despite a large surplus in the trust fund, the busiest U. S. harbors are presently under- maintained.
The U. S. Army Corps of Engineers ( Corps) estimates that full channel dimensions at the nation’s
busiest 59 ports are available less than 35% of the time. This situation can increase the cost of
shipping as vessels carry less cargo in order to reduce their draft or wait for high tide before
transiting a harbor. It could also increase the risk of a ship grounding or collision, possibly
resulting in an oil spill. To rectify this situation, some are calling for increasing disbursements
from the trust fund. However, Corps data indicate that a significant portion of annual HMTF
disbursements are directed towards harbors which handle little or no cargo. The Oregon Inlet in
North Carolina, Grays Harbor in Washington, Humboldt Harbor in California, and the Lake
Washington Ship Canal in Seattle are some of the harbors or waterways that fit this description.
Commercial fishermen and recreational boat ( or yacht) owners account for most, if not all, of the
vessel traffic in these harbors. Fishermen and recreational boaters do not pay the HMT. Some
might argue that to target one group of harbor users for assessing a fee and then to distribute
revenues mostly, or entirely, in some cases, for the benefit of other users, undermines the “ trust
fund” and “ user fee” concept. The Administration requested and Congress provided FY2010
funding for a pilot program to investigate the feasibility of having non- cargo harbor users finance
the dredging requirements of harbors with little or no commerce.
In addition to the distribution of HMT revenues for the benefit of non- cargo harbor users, there
are also equity issues associated with HMT revenue distribution among the nation’s top
commercial ports. Due to geological differences, ports vary greatly in the amount of dredging
they require. About one- fifth of HMTF expenditures are spent in Louisiana. The ports of Mobile,
AL, and Portland, OR also are relatively expensive to maintain. The amount of HMT revenue
ports generate also varies significantly due to differences in the amount and characteristics of the
cargoes they handle. Consequently, HMT revenues are redistributed from ports that are large
import gateways with naturally deep channels to lower volume ports that require frequent
dredging to maintain adequate channel depths and widths. The ports of Los Angeles, Long Beach,
Seattle, and Tacoma, and to a lesser degree, Boston, New York, and Houston are large net
generators of HMT revenue. International cargo predominates at most ports. Ports compete for
this cargo, and the growth of containerized cargo and the prospective expansion of the Panama
Canal have intensified competition among U. S. ports.
Legislation has been introduced in the 111th Congress that has varying objectives regarding the
HMT. H. R. 3447 would spend down the surplus in the HMTF. H. R. 2355 would increase the tax
rate and expand use of the HMTF for landside port infrastructure improvements. H. R. 3486, H. R.
638, S. 551, and S. 1509 would repeal the tax on non- bulk cargo shipped on the Great Lakes and
along the coasts in an effort to divert truck cargo from congested highways to waterways. None of
these bills have been reported out of committee.
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Contents
Introduction ............................................................................................................................... 1
Background ............................................................................................................................... 2
Legislative History................................................................................................................ 2
The HSUF Proposal ........................................................................................................ 2
Trading Partner Objections.................................................................................................... 3
Overview of Dredging Operations......................................................................................... 3
Container Ships, the Panama Canal, and Dredging Needs...................................................... 4
HMTF Revenues....................................................................................................................... . 5
HMT Revenue Generated by Port.......................................................................................... 6
HMT Revenue Generated by Shipper Group ......................................................................... 8
HMTF Expenditures ................................................................................................................... 9
Expenditures by Activity....................................................................................................... 9
Shallow vs. Deep Draft Channels .......................................................................................... 9
Expenditures by State.......................................................................................................... 10
Expenditures per Channel ................................................................................................... 11
High Expense, Low Use Shipping Channels ........................................................................ 13
Great Lakes Harbor Maintenance Costs......................................................................... 15
High Use, Low Expense Shipping Channels ........................................................................ 16
Port Cross- Subsidization: Advantages, Disadvantages ................................................... 17
Legislative Activity in the 111th Congress .................................................................................. 18
Figures
Figure 1. HMTF Balance............................................................................................................. 6
Figure 2. HMTF Expenditures Per Ton of Cargo On Selected Waterways .................................. 16
Tables
Table 1. Cost- Share Requirements for Corps Harbor Projects ...................................................... 4
Table 2. Top 25 Ports by Value of Imported Cargo....................................................................... 7
Table 3. Leading Commodities by Dollar Value Imported by Vessel ............................................ 8
Table 4. USACE HMTF Expenditures by State/ Territory........................................................... 10
Table 5. Top 25 Corps Projects Requiring the Most HMTF Expenditures................................... 12
Contacts
Author Contact Information ...................................................................................................... 19
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Introduction
In 1986, the Harbor Maintenance Tax ( HMT) was enacted to fund U. S. Army Corps of Engineers’
( USACE or the Corps) activities related to the routine operation and maintenance ( O& M) of
harbors, namely the dredging of harbor channels to their authorized depths and widths. This tax is
assessed on the value of imported and domestic cargo handled at ports at the current rate of
0.125% ($ 1.25 per $ 1,000 in cargo value), which in recent years has raised over $ 1 billion
annually. U. S. waterborne exporters no longer pay the tax because a 1998 U. S. Supreme Court
ruling found it unconstitutional. Importers generate about 95% of the tax revenue as domestic
waterborne cargo is much less in volume and value than imported cargo. The tax revenues are
deposited into the Harbor Maintenance Trust Fund ( HMTF) from which Congress annually
appropriates funds for harbor maintenance.
In recent years, HMTF annual expenditures have remained relatively flat while HMT collections
have increased due to rising import volume ( except in 2009 when collections declined along with
import volume). Consequently, a large “ surplus” in the HMTF has developed. Despite the surplus,
the busiest U. S. harbors are not being fully maintained, according to the Corps. Full channel
dimensions are, on average, available less than about a third of the time at the 59 highest use U. S.
harbors. 1 Under- maintained channels in busy U. S. ports could increase the risks of ship
groundings or collisions, resulting in spilled cargo or fuel oil. They also could raise the cost of
shipping, requiring ships to carry less cargo to reduce their draft or wait for high tide before
transiting a harbor. To rectify this situation, some industry stakeholders seek to enact a “ spending
guarantee” to spend down the surplus in the HMTF. However, examining where trust fund monies
have been spent indicates that little or no shipping is taking place at many of the harbors and
waterways that shippers are paying to maintain. Some of these harbors or waterways are among
the most expensive to maintain in the country and collectively they represent a significant portion
of total HMTF expenditures. Thus, in addition to possibly increasing HMTF expenditures,
policymakers may consider whether current expenditures are being efficiently and equitably
utilized. Given the amount of HMT collections not spent on harbors and the amount spent on
harbors with little or no cargo, a rough estimate is that less than half and perhaps as little as a
third of every HMT dollar collected is being spent to maintain harbors that shippers frequently
use.
Economic and equity issues related to HMT expenditures and collections are the main focus of
this report. Before analyzing these issues, the report reviews the legislative history of the tax and
legal challenges to it, discusses the advantages and disadvantages of alternative funding
mechanisms, and describes the commercial context of current dredging activity. The last section
identifies legislation in the 111th Congress related to harbor maintenance funding.
1 USACE, FY2010 Budget Justification, p. RIO- 12. Highest use is based on cargo tonnage handled.
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Background
Legislative History
The HMTF was established by Title XIV of the Water Resources Development Act of 1986
( WRDA, P. L. 99- 662, enacted November 17, 1986). Prior to 1986, U. S. Treasury general funds
were used to pay the federal share for operation and maintenance ( O& M) of harbors and for the
deepening of channels. 2 The HMT was originally assessed at 0.04% of the cargo value. This
revenue was intended to pay for 40% of O& M costs incurred by the Army Corps of Engineers
and 100% of O& M costs of the St. Lawrence Seaway. Section 11214 of the Omnibus Budget
Reconciliation Act of 1990 ( P. L. 101- 508) increased the HMT from 0.04% to 0.125% in order to
recover 100% of the Corps’ port O& M expenditures.
In addition to imported and domestic waterborne cargo handled at ports, the tax is assessed on the
value of the ticket in the case of cruise ship passengers. As mentioned earlier, export waterborne
cargo is not taxed as per a 1998 Supreme Court decision that found that it violates the export
clause of the Constitution, which states that, “ No tax or duty shall be laid on articles exported
from any state.” 3 At the time, exports generated about a third of the fund’s revenues. Other court
decisions ( including decisions by the U. S. Court of International Trade ( CIT), the U. S. Court of
Appeals, and the U. S. Supreme Court) have established that HMT is constitutional as applied to
domestic shipments and the embarkation of cruise line passengers. Generally, coastal and Great
Lakes ports are subject to the tax. A list of ports subject to the tax is codified at 19 CFR 24.24.
The list does not include ports on inland rivers that are subject to the inland waterways fuel tax
collected for the Inland Waterways Trust Fund. Passengers aboard ferries and cargo moving to
and from Alaska ( except for crude oil), Hawaii, and other U. S. possessions are also not subject to
the tax. Since 1998, nearly all of the tax revenue is generated by importers of waterborne
cargo4— domestic cargo shippers generate only about 5% of the revenue and cruise ship
passengers less than 1%.
The HSUF Proposal
In its 1998 decision the U. S. Supreme Court stated that a user fee based on the value of service
provided to a marine carrier would not violate the Constitution. In August 1998, the Clinton
Administration proposed a new revenue generating system using a Harbor Services User Fee
( 106th Congress, H. R. 1947). The payment of the Harbor Services User Fee ( HSUF) would be
placed on the carrier, rather than the shipper5 ( who pays the current HMT). The HSUF was based
on a vessel’s capacity, as measured by vessel capacity units, which are a volumetric measurement
of ship size based on net tonnage or gross tonnage as appropriate, and its frequency of port use
per voyage. Revenues from the fee would be deposited into a proposed Harbor Services Fund,
which would fund both routine maintenance and harbor- deepening projects ( new work). The
proposal was aimed at satisfying the Supreme Court ruling by establishing a closer link between
2 Prior to1986, the federal share of operation, maintenance, and deepening of ocean and inland ports was 65%. The
remaining 35% was paid by the ports, or by state and local government.
3 U. S. Supreme Court, United States v. United States Shoe Corp., 523 U. S. 360 ( 1998).
4 Foreign Trade Zone cargo is subject to the tax and is included with imports.
5 A “ shipper” is the owner of the cargo that pays a vessel operator ( carrier) to transport it.
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the revenue collection and the service provided, while being consistent with trade obligations.
The 106th Congress did not pursue the Clinton Administration’s proposal or other proposals, such
as a return to funding maintenance and dredging from general revenues ( H. R. 1260).
The stated advantage of the HSUF proposal was that it required ship owners to internalize the
cost of deploying larger ships. Although larger ships save money on the ocean leg, they increase
costs at port because, among other things, they require deeper channels and berths. 6 Ship
operators do not fully calculate these costs in their decision to build larger ships because dredging
costs are borne by others, namely their customers ( for harbor maintenance) and federal taxpayers
( for harbor deepening). To the extent that dredging costs are external to a ship operator’s cost-benefit
calculation, their decisions regarding fleet investment will be biased in favor of larger
ships. If these costs were internalized by the ship operators through payment of a dredging fee
based on ship size, some say, ship investment decisions would more accurately reflect the true
cost of bigger ships.
Trading Partner Objections
The federal government is statutorily required to continue collecting the HMT from non- export
cargo and passenger ships. The European Union sees the application of the HMT to imports as a
discriminatory import tariff that violates U. S. obligations under the World Trade Organization
( WTO). In February 1998, the European Union requested WTO consultations on the issue. A first
round of consultations took place in March 1998. Second round negotiations, which included
Japan, Norway, and Canada, took place in June 1998. The European Union indicated that if
satisfactory legislation was not passed by January 1, 2000, it would ask for a WTO dispute
resolution panel. As of 2009, however, the European Union has not requested a panel.
Overview of Dredging Operations
The HMTF is used to fund maintenance dredging, not new construction. Maintenance dredging is
work performed to maintain a channel’s depth and width to the dimensions authorized by
Congress. To increase a channel’s authorized depth or width requires an act of Congress, which is
referred to as construction or “ new work” by the Corps and is funded from the General Treasury,
not the HMTF. There are also different federal/ local cost sharing requirements between
construction and maintenance dredging as indicated in the following table.
6 The cost of bigger ships is illustrated at the Port of New York/ New Jersey. To deepen the port to 50 feet, dredgers
have had to go beyond just removing soft clay and silt— they have had to blast away up to ten feet of bedrock. But the
“ design” draft of a ship is not the only concern; sufficient “ air” draft can also be a problem. To reach most of the port’s
terminals, ships must pass under the Bayonne Bridge, which has an under- deck clearance of 156 feet at low tide, too
low for the size of ships expected to call at the port once the Panama Canal has finished its deepening project. The port
authority is studying options to either raise the deck of the existing bridge, build a new bridge, or dig a tunnel under the
ship channel.
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Table 1. Cost- Share Requirements for Corps Harbor Projects
Operation and Maintenance and Construction
Federal Share and ( Source of Funds)
Harbor Depth Operation & Maintenance Construction
< 20 feet 100% ( HMTF) 80% ( General Treasury) a
20- 45 feet 100% ( HMTF) 65% ( General Treasury) a
> 45 feet 50% ( HMTF) 40% ( General Treasury) a
Source: 33 U. S. C. 2211.
a. The non- federal sponsor pays 10% of the cost over a period not to exceed 30 years. For example, of the
20% paid by a non- federal sponsor for the construction of a harbor of less than 20 feet, 10% of the total
( half of the non- federal sponsor’s costs) is paid over 30 years.
Over the last decade, maintenance dredging has accounted for about seven out of every ten
federal dredging dollars and about 84% of the total material dredged ( construction dredging has
accounted for the remaining three dollars and 16% of total material dredged). About 80% of
maintenance dredging is performed by private contractors under the USACE’s direction. On a per
cubic yard basis, construction dredging is over twice as expensive as maintenance dredging. In
constant dollars ( 2000), the USACE calculates that maintenance dredging costs per cubic yard
have increased from $ 1.53 in 1963 to $ 3.19 in 2008.7
The Corps dredges only the federally designated channels in harbors. Port authorities are
responsible for dredging berths, which is the area next to the pier where a ship docks.
Container Ships, the Panama Canal, and Dredging Needs
In the early 1980s, deep draft colliers ( coal ships) fueled debate over U. S. port dredging needs.
Today, seemingly ever- larger containerships are the primary driving force behind current
dredging activity. Dry bulk vessels ( ships that carry grain, soybean, ore, or coal) also have grown
in size since World War II but at present there does not appear to be a trend towards larger vessels
in this category. Although oil tankers are among the largest vessels in the world fleet, typically, a
supertanker stays at sea for extended periods, loading or unloading at offshore platforms or
single- point moorings or discharging at designated “ lightering” zones offshore where a
supertanker transfers cargo to a smaller shuttle tanker.
Differences in service patterns between container and bulk ships account for the greater need of
container ships for deeper access channels. Bulk tankers are usually chartered per voyage
between a single origin and destination port and therefore have more flexibility in waiting for
tidal action to ease their passage in port. Container ships pick up and drop off cargo at multiple
ports as per an advertized schedule. Waiting for high tide would severely disrupt their service
performance. Container ships typically call at three or four ports within a coastal region. They
would likely be fully loaded at only the first and last calls, and partially loaded ( and therefore
needing less draft) at ports in between.
7 For further information, see the USACE’s Dredging Information System at http:// www. ndc. iwr. usace. army. mil/
dredge/ dredge. htm.
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Ships calling at U. S. ports have been limited in size somewhat by the dimensions of the Panama
Canal. The development of double- stack container rail service in the 1980s reduced the cost of
shipping containers over land across the United States, thereby reducing reliance on the Canal for
transcontinental shipments, and allowing trans- Pacific carriers to deploy larger, “ post- Panamax”
ships. This development increased the competitiveness of U. S. West Coast ports as gateways for
trans- Pacific containerized trade, which is by far much larger than trans- Atlantic trade. Recently,
the Panama Canal has embarked on a widening and deepening project, expected to be completed
around 2015.8 U. S. Gulf and East Coast ports anticipate that the Canal’s expansion will enhance
their competitiveness vis- à- vis West Coast ports in capturing Asian cargo and, thus, their interest
in dredging to accommodate larger ships has intensified. Due to geological differences, U. S. Gulf
and East Coast ports, as a group, require far more dredging than do West Coast ports, some of
which are particularly large generators of HMT revenue.
If U. S. ports subject to the HMT shipped more cargo between them, they would have more of an
economic interest in the maintenance of each other’s navigation channels. 9 However, domestic
shipping on the Great Lakes and along the coasts is only one- fifth the tonnage of U. S. foreign
waterborne trade and domestic vessels account for less than one in every ten ship calls at U. S.
ports. Besides Alaskan and Hawaiian ports which ship goods to and from California and
Washington State ports, the only other U. S. ports with significant domestic volume are Duluth,
Minnesota, which ships iron ore to Indiana and Ohio Great Lakes ports, and certain Gulf Coast
ports, which ship significant amounts of petroleum or chemical products between them. Thus, for
most U. S. ports, the relationship with one another is more competitive than complementary. This
is in contrast to the harbor maintenance funding mechanism, which creates a national pool of
funds and redistributes the tax revenues from busy U. S. ports with low maintenance costs to less
busy ports with higher maintenance costs.
HMTF Revenues
The revenues collected from the HMT are deposited into the HMTF. The HMTF balance was
almost $ 5 billion at the end of FY2009, as shown in Figure 1. Currently, revenue deposited into
the HMTF exceeds transfers out of the fund, which are approved by Congress annually. HMTF
expenditures fall under the discretionary spending budget ceilings. Congress appropriates funds
for the USACE to perform navigation operation and maintenance at individual harbors. The
amounts expended in a given year at harbors that qualify for recovery from the HMTF are
reimbursed to the General Fund. The HMTF balance increased in FY1999 as a result of the
Energy and Water Development Appropriations Act of FY1999 ( P. L. 105- 245), which did not
require the recovery of Corps of Engineers O& M expenditures from the fund for that year.
Although a decrease in international trade reduced HMT collections by about $ 375 million in
FY2009, the current HMTF balance, in conjunction with the revenue stream from the remaining
HMT collections and interest payments, is considered sufficient to recover expenditures for the
foreseeable future. Because the HMTF is not a separate, or “ off- budget,” account within the
federal budget, the “ surplus” in the HMTF has in effect already been spent on general
government activities.
8 The project will make possible an increase in Panamax ship dimensions in draft, length, and beam from 39.5’ x 965’ x
106’ to at least 50’ x 1,200’ x 160’.
9 The U. S. maritime industry contends that the HMT is an obstacle to coastal shipping because it raises the cost relative
to truck and rail modes.
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Figure 1. HMTF Balance
($ in millions)
$ 0
$ 1,000
$ 2,000
$ 3,000
$ 4,000
$ 5,000
$ 6,000
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Expenditures Collections Ending Balance
Source: USACE annual reports to Congress on the HMTF, Federal Budget Appendix for FY08- FY10.
Notes: Figures not adjusted for inflation, ending balances include interest earned.
HMT Revenue Generated by Port
In the administration of the tax, there is no attempt to identify particular port usage and allocate
funds accordingly. In other words, the HMT generates a national pool of funds, which is
distributed without regard to which ports used triggered collection of the tax. However, the tax is
meant to be a port user charge and comparing where the tax is assessed and where the revenues
are spent raises a number of policy issues. As indicated above, almost all the tax revenues are
generated by importers. This means that ports which handle a large amount of imported
containerized cargo are likely to be exceptional in the amount of HMT revenues they generate
since containerized cargo is generally higher in value than other cargo types. Data on cargo value
is collected by the federal government only for international cargo, not domestic, so it is not
possible to calculate the total amount of HMT revenue that could be collected at each port. To
provide a rough indication of which ports likely generate the most HMT revenues, the top 25
ports by imported cargo value in 2005 are listed in Table 2 ( 2005 is the latest year available; the
ranking is fairly stable from year to year). HMT revenue generation is quite concentrated. The top
15 ports account for 75% of the total value of imported cargo and the top 25 ports account for
over 85% of the total value.
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Table 2. Top 25 Ports by Value of Imported Cargo
2005, in millions of dollars
Rank Port Import Value % of Total
1 Los Angeles, CA $ 116,489 13.7%
2 New York, NY $ 104,366 12.2%
3 Long Beach, CA $ 103,801 12.2%
4 Houston, TX $ 52,306 6.1%
5 Charleston, SC $ 36,487 4.3%
6 Tacoma, WA $ 28,743 3.4%
7 Hampton Roads, VA $ 27,540 3.2%
8 Seattle, WA $ 27,519 3.2%
9 Baltimore, MD $ 27,048 3.2%
10 Oakland, CA $ 23,880 2.8%
11 Savannah, GA $ 22,129 2.6%
12 Morgan City, LA $ 20,946 2.5%
13 Philadelphia, PA $ 17,703 2.1%
14 Beaumont, TX $ 15,805 1.9%
15 Corpus Christi, TX $ 13,271 1.6%
16 New Orleans, LA $ 11,676 1.4%
17 Miami, FL $ 11,383 1.3%
18 Jacksonville, FL $ 10,067 1.2%
19 South Louisiana, LA $ 9,997 1.2%
20 Portland, OR $ 9,329 1.1%
21 Port Everglades, FL $ 9,283 1.1%
22 Texas City, TX $ 9,218 1.1%
23 Christiansted, VI $ 8,778 1.0%
24 Freeport, TX $ 7,918 0.9%
25 Boston, MA $ 7,322 0.9%
Source: Association of American Port Authorities.
Notes: 2005 is latest year available.
Among the ports listed in Table 2, Los Angeles, Long Beach, Tacoma, and Seattle stand out as
ports whose customers generate a substantial amount of HMT revenue that is mostly spent on the
maintenance of other harbors. Based on the HMTF expenditures these ports have received and the
HMT revenues generated on imported cargo alone ( not counting domestic cargo or cruise ship
traffic), Los Angeles and Long Beach likely receive less than a penny on the dollar, and Seattle
and Tacoma just over a penny for every dollar that import shippers who use their port pay in
HMT. New York, Boston, and Houston likely receive less than a quarter of tax revenues collected.
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HMT Revenue Generated by Shipper Group
To provide an indication of which importers generate the most revenues for the HMTF, Table 3
lists fifteen of the top commodities by value of cargo imported by vessel into the United States in
2008. These fifteen commodities account for about 82% of total cargo value imported by vessel.
Imported oil accounts for about a third of total value and generates more funds for harbor
maintenance than any other commodity ( as classified by the harmonized system at the 2- digit
level). Consumer goods also appear to generate significant HMT revenues because motor
vehicles, clothing, toys and sporting equipment, furniture, footwear, beverages, and at least a
portion of appliances and electrical machinery, if aggregated, account for over a third of import
value.
Table 3. Leading Commodities by Dollar Value Imported by Vessel
2008
Harmonized System
2- digit Code Brief Commodity Description
% of total imports
by vessel
27 Mineral fuels and oils 34.1
87 Vehicles, other than rail 9.8
84 Machinery and appliances 9.4
85 Electrical machinery 7.0
61 Clothing, knitted 2.7
73 Articles of iron and steel 2.4
95 Toys, games, and sporting eq. 2.4
97 Furniture, bedding, lamps, etc. 2.3
62 Clothing, not knitted 2.3
72 Iron and steel 2.1
29 Organic chemicals 1.7
39 Plastics, articles thereof 1.7
64 Footwear 1.5
40 Rubber, articles thereof 1.3
22 Beverages 1.2
Sum of above 15 commodities 81.9
Source: Global Trade Atlas.
One advantage of a harbor maintenance tax based on cargo value is that those who can most
afford to pay, pay more. Transport costs generally decrease as a percentage of cargo value as
cargo value increases. Thus, even though the HMT rate increases for higher value shipments, the
overall cost of transportation in relation to shipment value decreases for higher value shipments.
But cargo value does not have much correlation with dredging needs, so it works less well as a
user fee in this regard. One can say that shippers of high- value, low volume commodities ( such as
manufactured and finished goods) are likely to prefer a tax based on cargo tonnage rather than
cargo value. Conversely, high- volume, low- value shippers ( shippers of raw materials in bulk) are
likely to prefer a tax based on cargo value rather than cargo tonnage.
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HMTF Expenditures10
Expenditures by Activity
Maintenance dredging accounts for about four- fifths of the Corps’ total harbor and channel O& M
costs, ranging from about $ 525 million to close to $ 700 million per year in recent years. Since
establishment of the fund in 1986, the St. Lawrence Seaway Development Corporation’s
( SLSDC) operations and maintenance expenditures related to the seaway also are funded from the
HMTF. Since 1996, the administrative cost of collecting the tax by U. S. Customs and Border
Protection ( CBP) is also funded from the HMTF. 11 SLSDC and CBP expenditures from the
HMTF have been relatively minor compared to the USACE’s expenditures related to harbor
operation and maintenance. Annually, about $ 15 million to $ 20 million has been appropriated
from the HMTF to the SLSDC and $ 3 million to CBP.
Ancillary activities directly related to maintenance dredging or some other activity related to
keeping a waterway unobstructed are also recoverable from the HMTF. 12 For instance, since
1996, HMTF funds can be used to recover the federal share of construction costs for dredged
material disposal facilities and about $ 10 million to $ 15 million annually has been spent on
construction of these facilities. 13 Some HMTF funds also go towards channel surveying and
waterway management studies related to navigation. The USACE keeps one of its own dredges
on standby for emergency dredging purposes, at a cost to the HMTF of about $ 5 million per year.
In some harbors, drift material or aquatic weeds can be a navigation hindrance and HMTF funds
are used for their removal. Maintenance of harbor breakwaters and jetties is also recoverable from
the HMTF. HMTF monies have been used for the maintenance of certain bridges over waterways
which are the responsibility of the Corps.
In addition to the locks operated and maintained by the SLSDC, the HMTF is used to fund the
operation and maintenance of a few other locks not subject to the inland waterway fuel tax and
not funded by the Inland Waterway Trust Fund. These include the Soo Locks on the St. Marys
River in Michigan, the Chittenden Locks on the Lake Washington Ship Canal in Seattle, the
Bonneville Lock and Dam on the Columbia River in Oregon ( navigation portion only, not
hydropower), the Black Rock Lock at Buffalo, the Troy Lock on the Hudson River in New York,
multiple locks on the Okeechobee Waterway in Florida, and a few other locks along the Louisiana
coast.
Shallow vs. Deep Draft Channels
The USACE distinguishes HMTF expenditures for deep draft versus shallow draft harbors and
channels. Deep draft is greater than 14 feet, and shallow draft is 14 feet or less. On a yearly basis,
since 1987, between 81% and 90% of HMTF expenditures have been spent on deep draft harbors
10 HMTF expenditures discussed in this report are based on data obtained from the USACE for FY1999- FY2008. These
data are also available in annual reports to Congress on the status of the HMTF available at
http:// www. iwr. usace. army. mil/ inside/ products/ pub/ publications. cfm.
11 As per section 683 of the North American Free Trade Agreement Implementation Act ( P. L. 103- 182).
12 Eligible operation and maintenance activities are defined at 33 U. S. C. 2241( 2).
13 As per section 201 of WRDA 1996 ( P. L. 104- 303).
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and channels ( thus, between 10% and 19% have been spent on shallow draft waterways). Over
the last decade, about 16% of total HMTF expenditures have been spent on maintenance of
shallow draft channels. Most shallow draft facilities are primarily recreational in nature and
therefore contribute little ( if any) revenue to the HMTF.
Expenditures by State
As Table 4 indicates, nearly one- fifth of HMTF funds over the last decade have been spent in
Louisiana. HMTF expenditures for Louisiana amount to over 2.5 times the expenditures for the
second- ranking state, Texas, which accounts for about 8% of the expenditures. Michigan ranks
fifth and is the only state without a salt water port in the top 15 ( Ohio is the next state with only
freshwater ports and ranks 17th). Although North Carolina is relatively expensive in terms of
HMTF withdrawals, ranking 10th and accounting for 3% of expenditures, relatively little
commercial cargo is shipped on North Carolina waterways. North Carolina ranks 28th in
waterborne tonnage among the 30 coastal and Great Lakes states where the HMT is collected. 14 In
2007, North Carolina ports handled about 8% more cargo than Rhode Island ports, but its harbor
maintenance costs for the same fiscal year were nearly 20 times greater than Rhode Island’s. The
top 20 states in Table 4 account for 92% of HMTF expenditures from FY1999- FY2008.
Table 4. USACE HMTF Expenditures by State/ Territory
FY1999- FY2008
State/ Territory Total Expenditures, FY1999- FY2008 % of Total
LA $ 1,337,545,344 19.5%
TX $ 528,914,950 7.7%
FL $ 463,824,357 6.8%
CA $ 454,587,858 6.6%
MI $ 368,793,819 5.4%
WA $ 360,905,495 5.3%
NY $ 335,275,282 4.9%
OR $ 315,371,259 4.6%
AL $ 308,013,423 4.5%
NC $ 203,995,135 3.0%
PA $ 203,939,882 3.0%
VA $ 199,879,311 2.9%
MD $ 196,123,467 2.9%
DE $ 175,487,487 2.6%
SC $ 169,894,554 2.5%
GA $ 165,198,241 2.4%
OH $ 158,648,355 2.3%
14 Based on 2007 data. USACE, Waterborne Commerce Statistics.
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State/ Territory Total Expenditures, FY1999- FY2008 % of Total
MA $ 156,619,760 2.3%
MS $ 126,022,146 1.8%
AK $ 103,421,238 1.5%
WI $ 95,927,602 1.4%
IL $ 78,650,897 1.1%
NJ $ 71,275,946 1.0%
RI $ 53,671,428 0.8%
IN $ 42,308,218 0.6%
MN $ 35,487,755 0.5%
AR $ 26,486,590 0.4%
CT $ 25,985,732 0.4%
ME $ 21,157,401 0.3%
TN $ 20,858,107 0.3%
DC $ 12,306,056 0.2%
HI $ 11,341,176 0.2%
WV $ 10,722,657 0.2%
NH $ 10,039,049 0.1%
MO $ 7,345,887 0.1%
VT $ 5,702,513 0.1%
KY $ 3,426,413 0.0%
AS $ 2,511,858 0.0%
MP $ 1,673,199 0.0%
PR $ 861,850 0.0%
ND $ 197,016 0.0%
IA $ 67,464 0.0%
Total $ 6,870,466,176 100%
Source: USACE, Institute for Water Resources.
Notes: Some states/ territories have no expenditures for these years. AS is American Samoa, MP is Northern
Mariana Islands, and PR is Puerto Rico.
Expenditures per Channel
A list of the most expensive channels in terms of HMTF expenditures explains the state ranking.
Significant factors in determining O& M costs are the amount of sand and silt moved either by a
river or by coastal wave action, the total length of a channel, and number of locks. As Table 5
indicates, the most expensive channel is the Mississippi River from Baton Rouge to the river’s
end at the Gulf of Mexico. This shipping channel is about 250 miles long. It accounts for 43% of
Louisiana’s total HMTF expenditures and about 8% of the nation’s total. Hurricane Katrina may
have increased the need for maintenance dredging on the waterway, but even prior to its landfall
in August 2005, over twice as much HMTF expenditures were directed to Louisiana than the
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other leading states. Mobile Harbor in Alabama is the second most expensive, followed by the St.
Marys River channel in Michigan. The St. Marys River separates Michigan from Canada, and
locks on this river allow navigation between Lake Superior and Lake Huron. Other channels with
locks funded from the HMTF, as identified above, are also relatively expensive and some are
included among the top 25. The top 25 projects account for nearly half ( 49%) of total HMTF
expenditures.
Table 5. Top 25 Corps Projects Requiring the Most HMTF Expenditures
FY1999- FY2008
USACE Project Name State Total Expenditures % of Total
Mississippi River - Baton Rouge to Gulf LA $ 569,255,421 8.3%
Mobile Harbor AL $ 237,965,413 3.5%
St. Marys River MI $ 171,830,189 2.5%
Atchafalaya River and Bayous Chene ( Morgan City) LA $ 170,549,189 2.5%
C and LW Rivers Below Vancouver, WA and Portland, OR OR $ 170,246,210 2.5%
Calcasieu River and Pass ( Lake Charles) LA $ 169,437,833 2.5%
Delaware River, Philadelphia to the Sea PA $ 168,603,475 2.5%
Mississippi River - Gulf Outlet ( MRGO) LA $ 165,273,740 2.4%
Sabine- Neches Waterway ( Port Arthur, Beaumont) TX $ 140,012,326 2.0%
Intracoastal Waterway, Delaware River to Chesapeake Bay DE $ 128,293,084 1.9%
Savannah Harbor GA $ 123,447,085 1.8%
Columbia River at Mouth, OR and WA WA $ 118,840,779 1.7%
Baltimore Harbor and Channels MD $ 118,797,481 1.7%
Grays Harbor and Chehalis River WA $ 115,080,421 1.7%
Norfolk Harbor VA $ 96,059,577 1.4%
Houston Ship Channel TX $ 86,893,259 1.3%
Cape Cod Canal MA $ 77,146,947 1.1%
Charleston Harbor SC $ 75,709,695 1.1%
Tampa Harbor FL $ 73,591,646 1.1%
Wilmington Harbor NC $ 69,060,101 1.0%
Anchorage Harbor AK $ 66,334,135 1.0%
Lake Washington Ship Canal WA $ 62,923,861 0.9%
Manteo ( Shallowbag) Bay, NC NC $ 60,250,976 0.9%
Oakland Harbor CA $ 57,531,876 0.8%
New York Harbor ( Drift Removal) NY $ 56,945,637 0.8%
Source: USACE.
Notes: Project name as listed by USACE but with modification by CRS in some cases for clarity.
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High Expense, Low Use Shipping Channels
Some of the project names listed in Table 5 may not be recognizable to harbor maintenance
taxpayers because they are not harbors or channels commonly used by shippers. One example is
the Oregon Inlet on the Outer Banks of North Carolina ( which the USACE refers to as the
Manteo- Shallowbag Bay). Over the last decade, over $ 60 million ($ 6 million per year) has been
spent to dredge the inlet in an attempt to maintain the channel to its authorized depth of 14 feet
and width of 400 feet. Maintaining the channel to these dimensions, let alone keeping it open, is a
challenge because of the notorious amount of sand that naturally moves along North Carolina’s
barrier islands. Essentially, the navigation channel acts as a trap for the moving sand and must be
constantly removed, if the channel is to be kept passable. Although no cargo is moved through
this channel, commercial fisherman, charter boat operators, and recreational craft use the inlet.
The nearby fishing ports of Wanchese and Stumpy Point, North Carolina ranked 33rd in
commercial fish landings in 2007 ( 22.4 million pounds). 15
Oregon Inlet is exceptional in its dredging requirements but there are many more harbors, while
individually costing less to maintain, collectively cost shippers hundreds of millions to maintain,
even though no goods are shipped through them. Yaquina Bay and Harbor in Oregon is one
example. This harbor has received over $ 25 million in HMT revenues over the last decade. No
cargo has been shipped through this harbor in years, but it does rank 20th in commercial fish
landings and is a major recreational harbor.
Grays Harbor ( Westport) in Washington State is the 15th most expensive harbor channel to
maintain, yet, in 2007, it ranked 133 among U. S. ports in terms of the amount of cargo it handled.
Over the last decade, $ 115 million ($ 11.5 million per year) has been spent keeping the channel to
its authorized depth of 48 feet. About one ocean going ship and two or three coastal barges call at
this port per week. For comparison, the nearby ports of Seattle and Tacoma ( Sea/ Tac) have
withdrawn a combined total of $ 16.8 million over the last decade from the HMTF ($ 1.7 million
per year), yet these ports handle about 75 ocean going ships and thousands of barges per week
and handle 44 times more cargo than does Grays Harbor. Per ship call, maintenance dredging
costs at Sea/ Tac amount to less than $ 500, while at Grays Harbor they amount to over $ 250,000.
Although little cargo moves through Grays Harbor, it is much more significant to commercial
fishermen and recreational boaters. In 2007, it ranked 13th in commercial landings of fish ( 98.3
million pounds). 16
A similar situation occurs further down the coast at Humboldt Harbor ( Eureka), California,
which, like Grays Harbor, is highly dependent on trade in wood products. This harbor handles
even less cargo than Grays Harbor, 722,000 short tons in 2007,17 which is not enough cargo even
to make the list of the top 150 U. S. ports. Even so, about $ 4.5 million per year is spent from the
HMTF for maintenance dredging, making it the 33rd most expensive harbor to maintain. In 1998,
the port embarked on a deepening project from 40 to 48 feet but ship traffic has declined since
then. About one ocean going ship calls at this port per month. Barge traffic is a little more
frequent. Barges do not have the same draft requirements as oceangoing ships. 18
15 USACE, Waterborne Commerce of the United States, 2007, Part 5, National Summaries, Table 5- 3, p. 5- 7.
16 USACE, Waterborne Commerce of the United States, 2007, Part 5, National Summaries, Table 5- 3, p. 5- 7.
17 A short ton is equal to 2,000 pounds.
18 Necessary under keel clearance is generally two to three feet depending on whether the channel bottom is soft or
hard.
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Other high cost waterways are canals that see little or no use by cargo shippers, at least not the
big ships that would require the depths to which the canals are maintained. One example is the
Cape Cod Canal, built in 1914 by a private financier who figured vessels would prefer the shorter
route through the canal than the more circuitous and precarious route around the Cape. It was sold
to the federal government in 1928 because not enough vessel operators preferred the canal route
to make it commercially viable. Today, shippers are paying $ 7.7 million per year for the USACE
to maintain it. The only cargo shipped through the canal on a regular basis is fuel oil in barges.
The Cape Cod Canal costs nearly twice what it costs to maintain the Port of Boston’s channels
but handles less than half the cargo.
Another example of an expensive canal of little use to shippers is the Lake Washington Ship
Canal ( LWSC) that connects the Puget Sound with Lake Washington. Although located in Seattle,
no shippers use the canal because all of the Port of Seattle’s cargo terminals are located on the
Sound, thus ships have no reason to transit the canal. The canal’s cargo traffic is limited to
intraport barge movement of sand and gravel, but it has cost HMT taxpayers $ 63 million to
maintain over the last ten years which, like Grays Harbor, is tens of millions more than the costs
to maintain the Ports of Seattle and Tacoma shipping channels combined. On a daily basis, an
average of 100 pleasure boats ( see picture below), transit the canal, accounting for about 82% of
the canal’s traffic. ( Boaters prefer to dock in freshwater as there are no tides to contend with).
Based on the number of vessels of all types that have transited the canal over the last decade
( 538,135 vessel transits), each vessel would have to pay $ 117 per transit if the maintenance costs
were to be recovered from the canal’s users. This indicates the nominal value that shippers are
providing recreational boaters each time they pass through the canal. If recreational boaters were
charged a fee based on the size of their boat, some say, it could correlate well with their lock
usage and likely their ability to pay.
Pleasure Boaters Awaiting Free Lock Passage Through the LWSC
Source: USACE, LWSC website.
Neither of these canals is as expensive to shippers as the Chesapeake and Delaware Canal ( a. k. a.
the C& D Canal) which has cost HMT taxpayers over $ 128 million in the last decade to maintain,
almost three- fourths of what it has cost to dredge the entire Delaware Bay from the Port of
Philadelphia to the Atlantic Ocean. As its name implies, the canal connects the Delaware Bay
with the Chesapeake Bay, cutting across the State of Delaware. The canal was built because it
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was thought ships would take this short cut between the ports of Baltimore and Philadelphia.
While the C& D Canal carries about 15 million short tons of cargo per year, ports along the
Delaware Bay handle over 125 million short tons. The C& D Canal costs almost six times more,
on a per ton basis, than the cost to maintain the entire Delaware Bay. 19
Great Lakes Harbor Maintenance Costs
Great Lakes carriers and ports refer to a lack of adequate dredging as a crisis in their waterway
system, noting that many ships are “ light loading” ( carrying less cargo than the ship’s capacity to
reduce draft). 20 Lower than normal precipitation has affected lake levels in some years. The Great
Lakes Maritime Task Force, a coalition promoting Great Lakes shipping, asserts $ 200 million per
year in maintenance funding is needed to restore the system to its authorized dimensions, but
have only been appropriated about $ 90 million per year. While Great Lakes harbors and channels
have accounted for 14% of total HMTF withdrawals over the last decade, shipping on the Great
Lakes represents less than 10% of the total foreign and domestic tonnage shipped through ports
subject to the HMT. Maintenance costs amount to about 60 cents per ton of cargo carried ( based
on 1998- 2007 data) which, as Figure 2 indicates, makes the Great Lakes system one of the less
efficient waterways. Because Great Lakes shipping consists mostly of relatively low dollar value
raw materials ( iron ore, coal, and limestone), it does not generate much HMT revenues ( in 2005,
Great Lakes ports accounted for only 0.3% of the nation’s total value of waterborne imports).
Thus, under the present financing scheme, the Great Lakes region relies heavily on coastal port
use by importers to maintain their harbors.
Wide disparities exist among harbors when maintenance costs are compared on a per ton basis, as
there is little need for channel maintenance at some of the busiest ports in the country while some
rarely used ports or channels require extensive maintenance. Figure 2 illustrates this disparity
among selected U. S. harbors. Harbors that handle little or no cargo may generate economic
benefits for nearby communities through recreational boating or commercial fishing activity.
However, recreational and fishing vessels do not require the same channel depths and widths as
ships and paying for their maintenance by increasing shipping costs can be seen as a shift of finite
resources from those who pay the tax as a user fee to those who do not.
19 Another canal that could be included here is the Mississippi River Gulf Outlet ( MRGO) which, as indicated in Table
2, ranks eighth in maintenance expense. Although built to provide a shorter route to the Port of New Orleans, most
ships continued using the Mississippi River channel. MRGO has recently been closed to navigation and suspected by
many as contributing to the flooding of parts of New Orleans by Hurricane Katrina. This waterway is discussed in CRS
Report RL33597, Mississippi River Gulf Outlet ( MRGO): Issues for Congress, by Nicole T. Carter and Charles V.
Stern. See also http:// www. mrgo. gov for the latest information on MRGO’s closure.
20 For further information, see http:// www. glmtf. org.
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Figure 2. HMTF Expenditures Per Ton of Cargo On Selected Waterways
2003- 2007
$ 0.02 $ 0.09 $ 0.10 $ 0.13 $ 0.14 $ 0.20 $ 0.33 $ 0.42 $ 0.44
$ 0.90 $ 0.92
$ 4.94 $ 5.13
$ 6.16
< $ 0.01
$ 0.75
$ 0.00
$ 1.00
$ 2.00
$ 3.00
$ 4.00
$ 5.00
$ 6.00
$ 7.00
Los Angeles/ Long Beach
Sea/ Tac
Boston
NY/ NJ Harbor
Delaware Bay Ports
Miss Rvr - Baton Rouge to Gulf
St. Marys Rvr, MI
Charleston, SC
Savannah, GA
Mobile, AL
C& D Canal
Wilmington, NC
Cape Cod Canal
Humboldt Harbor, CA
Lake Washington Ship Canal
Grays Harbor, WA
Maintenance Costs/ Ton
Source: USACE Waterborne Commerce Statistics, HMTF Annual Reports to Congress.
Notes: The figure for Los Angeles/ Long Beach equates to $ 0.003/ ton. HMTF Expenditures based on FY2003-
2007, Cargo tonnage based on CY2003- 2007.
High Use, Low Expense Shipping Channels
While significant amounts of HMT funds are spent at harbors and channels that see little or no
ship traffic, says the Corps, the busiest shipping channels in the country are not being maintained
to their authorized depths and widths. As mentioned above, according to the Corps analysis, full
channel dimensions are available less than an average of 35% of the time at the 59 highest use
U. S. harbors. 21 Most, if not all, of the busiest ports in the country generate more than sufficient
HMT revenue to cover Corps O& M expenditures at their port, even at exceptionally dredging-intensive
ports like those on the Mississippi River in Louisiana. While the top ten ports account
for nearly 70% of the total value of foreign goods shipped through U. S. ports, these ports have
received about 16% of total HMTF expenditures over the last decade. In terms of ship traffic,
21 USACE, FY2010 Budget Justification, p. RIO- 12. The budget document indicates that the Office of Management
and Budget requested this analysis from the Corps to justify increasing dredging expenditures. Further details on this
analysis are not available, so it is not known, for instance, how much narrower or shallower the channels are compared
to their authorized depths and widths.
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80% of oceangoing ships arriving in the United States call at one of the nation’s twenty busiest
ports, but these twenty ports, based on a rough calculation, account for less than 40% of total
HMTF expenditures. As indicated above, a good portion of the HMT revenues that shippers
generate are used to dredge channels used mostly by either recreational boaters or commercial
fishermen, which do not pay the HMT. Given the amount of HMT collections unspent on harbor
maintenance and the amount spent on shallow draft or little used deep draft harbors, a rough
estimate is that only 30 to 45 cents of every HMT tax dollar paid is being spent on harbors that
shippers readily use. 22
Some might argue that to target one group of harbor users for assessing a fee and then to
distribute revenues mostly, or entirely, in the case of some harbors, for the benefit of other users,
undermines the “ trust fund” and “ user fee” concept. Moreover, since fishing and marinas are
commercial enterprises and private recreational boaters ( and especially yacht owners) are not
indigent harbor users, it might be asked why these users could not also contribute to the cost of
maintaining the harbors they use. As originally introduced, the HMT would have been assessed
on commercial fishermen. An amendment exempting commercial fishing from paying the tax was
agreed to during Senate committee consideration. 23 Recreational boaters currently pay federal
fuel taxes and import duties, which are used, among other things, to fund boat safety programs
and recreational boat docking and sewage disposal facilities, but are not used to fund dredging
activity. This fund, the Sport Fish Restoration and Boating Safety Trust Fund, generates an
equivalent amount of revenue on an annual basis as the HMT.
Port Cross- Subsidization: Advantages, Disadvantages
Because the HMTF provides a national pool of funds for channel dredging rather than a port
specific one, naturally deep harbors subsidize shallower ports. Thus, the present funding system
levels the playing field among ports with different dredging requirements. Some might contend
that it draws traffic away from more efficient ports to less efficient ports, in terms of dredging
costs, thereby raising the Nation’s overall cost of moving goods through the marine transportation
system. Cross- subsidies among ports would be eliminated if funds generated at a particular port
were reserved solely for that port’s local dredging needs rather than becoming part of a nation-wide
fund. However, a port- specific funding system would favor busy ports over ports that are
underutilized. With more ship traffic, larger ports would not have to charge as much per ship or
shipment to recover dredging costs as smaller ports ( for example, the tremendous difference in
dredging costs per ship call between Grays Harbor and SeaTac cited earlier). Some small ports
would either have to close or service only small ships. Thus, a national pool of funds provides
maintenance funds to smaller ports that otherwise would be economically unviable. However,
smaller ports could reduce the overland transport costs for nearby importers or exporters, thereby
promoting economic development in the region. There are also river systems that have significant
levels of industry along them and the inability to move bulk cargoes out of smaller ports could
diminish U. S. exports. Smaller ports can also provide shippers the option of moving cargo
through less congested ports. For instance, Chrysler recently announced that it would begin
22 More precise data comparing port maintenance costs with port traffic data may be available from the Corps as part of
its “ Coastal Inlets Research Program,” which includes development of a “ Channel Prioritization Tool” with
information on depth utilization by commercial shipping and cargo value estimates for each channel and a “ Coastal
Structure Management, Analysis, and Ranking Tool.” The Corps received $ 2.3 million in FY2009 for this effort and
requested $ 3 million in FY2010. See USACE FY2010 Budget Justification, pp. RIO – 14 – 16.
23 132 Congressional Record S3391.
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Congressional Research Service 18
exporting cars to Asia through Grays Harbor in Washington, in part, for this reason. 24 If not
handling cargo, smaller ports can still service the maritime industry in other ways. Smaller ports
can be strategically located in terms of providing a “ harbor of refuge” for vessels in distress, as a
base for Coast Guard search and rescue operations, or as a homeport for government research
vessels. For example, the National Oceanic and Atmospheric Administration ( NOAA) recently
announced that it would be moving its West Coast vessels from Seattle to Yaquina Bay and
Harbor in Oregon.
Legislative Activity in the 111th Congress
In the 111th Congress, several bills have been introduced to either change the tax rate or how
revenues from the tax are spent. None of the introduced bills have been reported out of
committee. H. R. 3486, H. R. 638, S. 551, and S. 1509 would repeal the tax on domestic
waterborne non- bulk cargo and cargo imported from Canada through the Great Lakes for the
purported purpose of mitigating highway congestion by diverting shipments from truck to water
modes. Groups supporting this legislation contend that in addition to the HMT rate, the
administrative burden of filing the tax discourages potential waterborne shippers, because they do
not pay a separate tax when shipping by truck or rail. Others question to what extent this is true,
however. Most truck shippers are not located on waterways and therefore would require a truck
move to and from the loading and discharge ports to utilize waterborne transportation. These
truck and cargo transferring costs could be a significant cost impediment for truck shippers to
utilize waterborne transportation, regardless of the HMT.
H. R. 3447 would do away with the requirement that HMTF spending be appropriated by
Congress giving the USACE more autonomy over the amount spent yearly on harbor
maintenance. Another proposal for spending the HMTF surplus is to provide a “ spending
guarantee” or “ firewall” modeled either after the highway or airway trust funds. An industry
coalition that seeks this legislative change consists mostly of ports and dredging contractors;
noticeably absent from their membership are shippers who pay the tax. 25 Opponents of these
proposals argue that they would inhibit Congress’ ability to adjust funding priorities from year to
year.
H. R. 2355 would increase the tax rate to 0.4375% ($ 4.38 per $ 1,000 in cargo value) and expand
use of the fund for landside port improvements in addition to the waterside maintenance
performed by the Corps. Increasing the capacity of highways and railroads leading to seaports has
been an issue as Congress debates reauthorization of surface transportation funding programs, but
minus a federal fuels tax increase, a major stumbling block has been how to increase federal
funds for surface transportation improvements. 26
24 American Shipper, Online, “ Chrysler to Export Cars From Grays Harbor,” December 21, 2009.
25 The coalition is Realize America’s Maritime Promise, http:// www. ramphmtf. org.
26 For further discussion, see CRS Report R40629, Freight Issues in Surface Transportation Reauthorization, by John
Frittelli and William J. Mallett.
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Congressional Research Service 19
The Obama Administration, in its FY2010 budget submission, requested that a pilot project be
created to examine the feasibility of having local users finance the maintenance dredging of
channels with little or no commercial traffic. 27 Congress reduced the amount of funding for this
program from $ 1.5 million to $ 1.4 million. 28
The American Recovery and Reinvestment Act of 2009 ( P. L. 111- 5) provided $ 4.6 billion for the
USACE Civil Works Program, of which $ 2.3 billion was appropriated for operation and
maintenance. Based on an August 1, 2009, project listing by the Corps, it appears that roughly
$ 500 million is slated for maintenance dredging of coastal and Great Lakes harbors.
Author Contact Information
John Frittelli
Specialist in Transportation Policy
jfrittelli@ crs. loc. gov, 7- 7033
27 See FY2010 USACE Budget Justification, p. RIO- 42, which indicates that the pilot project would focus on the
Atlantic Coast and Chesapeake Bay. See also written testimony of Terrence C. Salt, Acting Assistant Secretary of the
Army for Civil Works before the Subcommittee on Energy and Water Development, Senate Committee on
Appropriations, June 18, 2009.
28 See H. Rept. 111- 278, p. 87.